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Nike opts out Manchester United jersey deal — will Adidas step up?

U.S.-based sportswear giant decides there are better ways to a spend $100 million a year in sponsorships. Adidas seems set to replace them.

Manchester United's English striker Wayne Rooney shoots to score the opening goal during the English Premier League football match between West Ham United and Manchester United at the Boleyn Ground, Upton Park, in London on March 22, 2014.
AFP PHOTO / CARL COURT
RESTRICTED TO EDITORIAL USE. No use with unauthorized audio, video, data, fixture lists, club/league logos or live services. Online in-match use limited to 45 images, no video emulation. No use in betting, games or single club/league/player publications.CARL COURT/AFP/Getty Images (CARL COURT / AFP/GETTY IMAGES)

Hours after Manchester United unveiled their new Chevrolet-sponsored game jerseys, apparel powerhouse Nike quietly announced it wouldn’t seek to renew its deal with Man U when it expired after the upcoming season.

Together Nike and Adidas control a 90 per cent share of the worldwide market for soccer shoes, their combined retail revenue topping $4.5 billion (U.S.) But while the FIFA World Cup has provided one more venue for Nike and Adidas to battle for brand supremacy – advantage Adidas after Germany’s 7-1 thrashing of Nike-backed Brazil in Tuesday’s semifinal – experts don’t interpret the end of the Man U deal as a concession from Nike.

Instead, they say, the company’s marketing needs have evolved while a comprehensive digital ad campaign allowed it to engage with fans in ways a logo on jersey can’t facilitate.

And for less money.

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“Nike can still build on its position without having to shell out 60 million Euros a year on a shirt partnership,” says Vijay Setlur, who teaches sports marketing at York University’s Schulich School of Business. “Paying (Man U star) Wayne Rooney is a lot less than paying the whole club. Maybe the partnership outlived its usefulness.”

While a replacement apparel supplier hasn’t been finalized experts say Adidas makes sense given that few other brands could to take over the deal, which had paid Man U $100 million annually since 2002.

But the sports marketing environment has changed since Nike signed on as Man U’s apparel supplier.

While no other soccer club matches Man U’s worldwide profile — the club claims more than 650 million “followers” — several other soccer clubs have joined the Reds in marketing themselves internationally. When Toronto FC paid $10 million to Tottenham Hotspur for the rights to striker Jermain Defoe, Maple Leaf Sports and Entertainment also agreed to a four-year marketing deal with the English club.

Deals like that mean a team like Man U is no longer the only way to market across borders using a soccer club, which in turn means they may have reached a limit to what they can charge for the privilege of outfitting them.

“Even if you’re the biggest company in the sports world you have to justify the expenses,” says sports retail industry analyst Matt Powell of Princeton Analysis. “It starts to signal that there’s a top to the marketplace.”

Still, Ryerson University sports marketing professor Cheri Bradish points out that even if the club’s “follower” count is inflated, association with the Man U brand still offers sponsors a reach other sports teams can’t match. So even if the club is no longer a fit for Nike, brands who can afford to sponsor Man U can still boost their visibility in new markets.

“It’s a pause for thought because it’s a model MLSE wants to emulate,” says Bradish, the Loretta Rogers Research Chair in Sports Marketing. “What could MLSE do with a local partner if they had 650 million followers?”

Chevrolet’s jersey sponsorship deal with Man U is worth $79 million (U.S.) annually, but the club’s fans weren’t impressed with the kit the club revealed Monday afternoon.

And the unveiling also comes as Chevrolet’s parent company GM deals with 54 product recalls affecting 25.7 million vehicles this year alone.

Manchester United hasn’t had an outstanding 2014 either. This spring the club finished seventh in the English Premier League, marking the first time since 1990-1991 they finished outside the top three. And the publicly-traded club’s stock price peaked at $18.78 per share on April 22, when manager David Moyes was fired.

“I would find better things to do with that kind of money because everybody’s already aware that Chevy exists,” he says. “If anybody believes sticking a Chevy logo on a Man U jersey makes Chevy the vehicle of champions they’re probably smoking something illegal.”

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